Biran Patel, 2nd from left, vice chairman of the Asian American Hotel Owners Association, joined other small business owners in standing with President Donald Trump during a Rose Garden announcement about the administration’s new rules governing health reimbursement arrangements (HRAs) on Friday, June 14, 2019. (Photo courtesy AAHOA)

Days after the launch of a $349 billion emergency small-business lending program, some of the country’s biggest banks say they have already allocated more than 10% of the fund, raising concerns there won’t be enough money for the millions of companies expected to apply.

Bank of America, alone among the big banks to begin processing applications Friday, said Monday that it received 178,000 applications from small businesses seeking $32.9 billion in loans. Wells Fargo never formally started taking applications, but by Monday morning it said so many people had expressed preliminary interest that it had already reached the $10 billion cap it had set for loans under the program.

Small businesses, which employ nearly half of the United States’ private-sector workers, say they are facing long waits, confusing rules and rejection as they scramble to secure loans through the fund, known as the Paycheck Protection Program. Many banks are accepting applications only from existing customers or businesses of certain sizes. Others aren’t accepting any applications at all.

Pressure on the program is expected to build later this week, when it will open to millions of independent contractors, including gig economy workers such as Uber drivers. The “program will run out of cash next week,” Jaret Seiberg, financial services analyst at Cowen Washington Research Group, said in a research note.

Demand for the program also is expected to increase dramatically after the Small Business Administration said Monday that faith-based organizations would be eligible for loans. “Faith-based organizations have always provided critical social services for people in need, and SBA will make clear that these organizations may access this emergency capital,” SBA Administrator Jovita Carranza said.

The SBA and the Treasury Department did not return emails seeking comment about whether the emergency fund would run out of money before exhausting demand from small businesses.

At an afternoon news conference, President Donald Trump acknowledged that the program had run into a few minor “glitches” but said they had been addressed. “I think it’s done very well,” said Trump, who repeatedly praised Bank of America.

“We’re probably going to have to add more money to this to save and to keep our small businesses going and to keep the employees of those small businesses working,” Trump said of the program’s funding levels.

But the program’s early problems have small-business owners including Bill Griffith worried. Griffith estimates that his company, Georgia-based Innovative Machining Solutions, would be eligible for a $50,000 loan under the program, helping him keep his five employees.

He has repeatedly called his longtime bank, Wells Fargo. But the San Francisco bank announced it cannot lend more than the $10 billion it already allocated because the Federal Reserve put a cap on its size after consumer abuses rattled regulators’ confidence in the bank. (Wells Fargo also announced that it would only be lending to nonprofits and the smallest companies, with fewer than 50 employees, so it could reach the neediest groups.)

Griffith said he is concerned that by the time he finds out whether Wells Fargo will accept his application, it will be too late to apply through another bank. “It’s not going to last long,” he said of the $349 billion fund.

Michelle Loewinger, a dentist in Washington, closed her office last month and laid off her three employees. With a loan, Loewinger said, she could rehire her employees and cover rent for her office building.

She checked Wells Fargo’s website once an hour for days, waiting to put in a formal application. When she had trouble getting through, she tried Bank of America but learned she didn’t qualify because she didn’t have a business account there. “No other banks will take it unless you have an account,” she said.

Loewinger worries that because Wells Fargo isn’t taking more applications, she could be locked out of the emergency fund altogether. “Just because I happen to use Wells Fargo, I get nothing, and my employees get nothing, and my rent isn’t getting paid,” she said. “Two of largest banks in world, and neither will make a loan.”

The program, seen as a key part of Congress’ $2 trillion economic rescue package, is meant to help small-business owners retain their employees during the coronavirus pandemic. Businesses with fewer than 500 employees are eligible for loans of up to $10 million. The loans will be forgiven, meaning business owners won’t have to pay them back, if they meet certain conditions, including using 75% of the money to retain or rehire employees.

The program got off to a rocky start Friday. The Treasury Department and the Small Business Administration didn’t release the final rules until a few hours before it launched. Many of the country’s largest banks were still reviewing the rules as thousands of small-business owners began applying.

By Monday, the problems were persisting. Some big banks, including Citigroup, still haven’t begun accepting applications. JPMorgan Chase, the country’s largest bank, took its site down briefly to make “essential updates” and simplify its application.

Many banks have restricted access to their existing customers and say that while they have begun processing the loans, they lack the proper SBA documentation to finish the process and turn the money over to the businesses.

Hundreds of lenders are still trying to get approval to access the SBA system so they can process loans, Rebeca Romero Rainey, president and chief executive of the Independent Community Bankers of America, said in a letter Saturday to Treasury Secretary Steven Mnuchin and Carranza. Banks are experiencing “massive delay” and remain “frustrated with a myriad of unanswered questions” about how the process is to work, she said.

“Without a more robust intake process, American small businesses in many parts of the country will not receive and deploy the funds intended for them,” Rainey said. “Community bankers are frustrated with failed technology links and portals.”

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